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The promise of smart contract adoption is held back by crypto silos

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The internet is buzzing over recent developments in decentralized finance, or DeFi — smart contracts are hotter than ever. You might think you missed the coronation ceremony, but smart contracts are actually used in only a small corner of the crypto world, albeit a corner worth billions of dollars. It’s a promising concept that has gone widely unused in the business world.

Despite the headlines and in spite of crypto-cloistering, smart contracts are not overhyped. The ability to execute secure and complex business transactions is a barrier that keeps plenty of people out of business altogether. Moreover, every major company in the world would jump at a meaningful chance to reduce expenses, due to the endless legal fees involved with business transactions. Although tedious and expensive, unknown business partners must develop a sense of trust between each other to ensure the fulfillment of contracted work. Smart contracts can streamline this process and lower costs for everyone.

While all of this is true and exciting, smart contracts are almost only used in the world of cryptocurrencies. Although there are billions of dollars flowing through smart contracts, they remain locked in this speculative world of crypto trading. What are smart contracts, and what will it take to turn these transformative promises into a popular process?

What makes a contract smart?

There’s nothing inherently smart about smart contracts. Like SpaceX and Chumbawamba, smart contracts are poorly named. The easiest way to understand smart contracts is to think of them as computer programs. As with any contract, these programs bring together two or more parties in a binding agreement. While normal contract agreements are paper-intensive (even digitally), heavily reliant on legalese and slow to form consensus, smart contracts are relatively lightweight, fast and flexible.

Smart contracts are natural outgrowths of blockchains and related distributed ledger technologies, or DLTs. Because of the transparency and immutable nature of DLTs, smart contracts bring parties together through security and trust. Before blockchains, the idea of digital contracts was unimaginable, as each party would have no way to ensure digital trust and security.

The legal expertise and careful deliberation needed for contract work are replaced by code and automation in smart contracts. Once two or more parties enter into a smart contract, and the contract is automatically saved under ideal, secure conditions. This helps businesses save time and money, while also opening up for more opportunities. So, what’s the holdup? Why aren’t smart contracts more mainstream?

That’s going to cost you

Since most smart contracts are built on blockchains, every transaction requires a fee to validate the block and inscribe it into the DLT. The reason for the fee is that blockchains rely on miners to perform the computing labor involved, by adding new blocks to the network. No fees means no incentive for miners, and this would not bring new transactions. So, blockchains have fees, but what’s worse is that the fees are volatile, fluctuating according to network traffic and currency valuations.

Related: Going feeless is the only way to enable blockchain adoption

If you’re a business owner thinking about moving parts of your operation to a blockchain-enabled smart contract, problems with fees could become a major headache. If you’re an individual who would like to leverage blockchains to protect yourself in a business agreement, the fees involved with smart contracts might be too expensive to consider. A zero-fee structure would be ideal, but the fees must be transparent and stable, so people can fit smart contracts within their budget.

The most widely used smart contract platform in the world right now, Ethereum, becomes more expensive to use the more popular it becomes. This is the opposite of how a business is supposed to function, and a clear sign that something is fundamentally wrong with the smart contract design.

Stuck in the silo

Email is a great tool that has transformed the way people do business. However, imagine if email were only possible between users of the same service. If that were the case, we might see some limited email operations within larger offices, but certainly not in the mainstream.

Smart contracts do not have this interoperability at the moment. This means that if a company wants to enter into a smart contract with another company, both companies must be working with the same cryptocurrency. This may lead to limited interactions between closely aligned business partners, but the separation of different protocols into isolated silos will never be widely adopted.

It’s not reasonable to expect any major business to commit to one cryptocurrency, especially given the degree of volatility in crypto. Unfortunately, almost every smart contract protocol today is intimately bound to its parent blockchain, and getting these various protocols to work with one another is no easy task.

Who’s in charge here?

The aforementioned problems of lower or non-existent fees and of interoperability can be solved from within the crypto community by developers working toward a common goal. However, there are other issues at play, such as the environmental impact of mining, lag time in executing transactions on a DLT, privacy protocols on public ledgers, and the “oracle” problem of bringing outside data into the DLT environment.

A bigger problem that belongs in a completely different category is legal jurisdiction, which cannot be solved internally. In conventional or current contract law, a jurisdiction is always established within the terms of the contract. There are entire branches of international and business law that govern accountability and consequences if and when things turn south.

Smart contracts represent a unique development for the entire concept of jurisdiction. Legally, cryptocurrencies operate in a kind of new realm of sovereignty. An agreement that lives in a decentralized, global network of computers, operating on a currency that belongs to no government, and executed by an open-source computer code is a difficult entity to “place.” This is a big reason as to why crypto remains mostly unregulated — what many people refer to as the new “Wild West.” If you’re in a smart contract and the other party wrongs you, which court would take your claim?

The solutions to these problems will come as DLTs grow and gain more power. It’s up to governments and other regulatory authorities to build common legal frameworks that can accommodate smart contracts and other DLT transactions. At the same time, these new technologies will never achieve the required credibility and acceptance if crypto developers continue to act like the gold prospectors in 19th-century California. It’s important that the community continues to think long term and builds up for mass adoption, rather than throwing elbows in this frenzied cash grab.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Dominik Schiener is a co-founder of the Iota Foundation, a nonprofit foundation based in Berlin. He oversees partnerships and the overall realization of the project’s vision. Iota is a distributed ledger technology for the Internet of Things and a cryptocurrency. Additionally, he won the largest blockchain hackathon in Shanghai. For the past two years, he has been focused on enabling the machine economy through Iota.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cointelegraph.com/news/the-promise-of-smart-contract-adoption-is-held-back-by-crypto-silos

Blockchain

Grayscale Adds $1 Billion in Bitcoin, Nears $50 Billion in Total AUM

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Investment giant Grayscale recently added another $1 billion worth of Bitcoin in almost 24 hours. Now, the firm nears the $50 billion mark with $46.1 billion in total assets under management (AUM)

AUM Growing

As reported by CryptoPotato recently, the investment firm increased its total AUM by more than $3 billion, shortly after expanding its crypto-trust offerings by adding five new tokens for their eligible accredited investors. 

The Grayscale Bitcoin Trust (GBTC) accounts for $38.1 billion (82.64%) of Grayscale’s total AUM, while the Ethereum Trust (ETHE) accounts for $6.6 billion (14.26%). The remaining trusts, including Bitcoin Cash and Litecoin, account for the rest.

Notably, tokens such as Filecoin, Livepeer, Basic Attention token, MANA, and LINK saw a surge in price after Grayscale announced adding them into the list of offered trusts. The company expanded its total number of trusts to 14 after CEO Michael Sonnenshein explained they see many clients seeking exposure to more crypto assets.


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Grayscale Confirms Its Intentions to Launch a BTC ETF

Grayscale has confirmed its plans to convert its most popular investment product, the GBTC, into a Bitcoin Exchange-traded fund —after posting several ETF-related job positions on its careers page. Although, the firm does not consider that the current regulation weather in the United States is suitable for such a fund.

Unlike other investment giants that have filed for an ETF using S-1 forms, Grayscale will remain committed to converting GBTC into an ETF as the US’s regulatory environment gets clearer.

Founded in 2013, Grayscale has become the most prominent digital asset manager for accredited investors seeking exposure to bitcoin and other crypto assets. The institutional demand for BTC accelerated at the beginning of this year, according to Sonnenshein, adding that demand is nowhere near decreasing.

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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cryptopotato.com/grayscale-adds-1-billion-in-bitcoin-nears-50-billion-in-total-aum/

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Blockchain

Why ADA could run hotter than Bitcoin and make 10x gains

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After breaking in the crypto top 10 by market cap and with 3.597% gains over the past year, Cardano (ADA) seems to be laying low. At the time of writing, ADA trades at $1,24 with 1.7% profits in the daily chart and 6.4% in the weekly chart.

Cardano ADA ADAUSDT
ADA moving sideways in the 24-hour chart. Source: ADAUSDT Tradingview

Cardano’s native token and its platform are moving towards a major milestone. Targeting a Q3 entry into DeFi with Hard Fork Combinator Alonzo.

Bullish investors are betting on ADA’s further appreciation. Analyst Justin Bennett claims this token next rally will happen by the end of April. Around this time IOG should be stress-testing its smart contracts platform, Plutus.

A day ago, Bennet said to be building a “sizeable” ADA position and set support at $1.10 to $1.30. Over the next month’s, according to the analyst, ADA could go as high as $10.

On the Cardano’s native token recent price action, the analyst said it moving sideways is an indication of a “fair game”, a sign that ADA’s price is not overvalued. Bennet added:

ADA moving sideways for 6 weeks tells me the market doesn’t believe it’s overvalued at all. I don’t buy markets that are going vertical. I buy markets that went vertical recently and have since gone sideways for over a month. That’s a recipe for the next leg higher.

By the end of the month, ADA could target $2, as indicated by the chart below, and then could go for a higher price at $3 in the coming months.

Cardano ADA ADAUSDT
Source: Justin Bennett

In the 2017 bull run, ADA peaked at $1,18 therefore Bennet claims it could a 10x from its current price. Comparing ADA to Bitcoin, the analyst said the latter has “never done less than” a 10x profit in a bullish cycle. He added:

We know alts run hotter than Bitcoin. Translation: $10 $ADA is conservative, and $20 – $30 wouldn’t surprise me.

Smart contracts capabilities closing in on Cardano

Cardano’s next protocol upgrade is set to make it “the leading smart contract platform”, according to Olga Hryniuk from IOG. Outlining Alonzon’s roadmap and launch, Hryniuk wrote:

Throughout March and April, the IO Global team has been gradually combining the Alonzo rules with the Cardano node and ledger code (…). We expect the Alonzo upgrade (hard fork) to happen in late summer, and we will announce a firm date in April’s Cardano360 show.

In the crypto space, many believe Ethereum’s high fees are pushing users towards cheaper options. Cardano’s platform promises this with higher security for its smart contracts and EVM compatibility.

If Ethereum’s competitors, like Binance » Read more

” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>Coin (BNB), performance is any indication of where ADA could go, then investors should pay attention to BNB’s rally.

With a 70.6% increase in just one month, BNB seems pegged to smash all resistance and keep scoring all-time highs. It remains to be seen if ADA will follow and take a place amongst DeFi giants.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.newsbtc.com/news/why-ada-could-run-hotter-than-bitcoin-and-make-a-10x-gains/

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Blockchain

Litecoin Price Analysis: 11 April

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The Litecoin market has been seeing significant growth in price since the beginning of the year. At the time of writing, LTC was returning 93% year-to-date to its investors.

LTC was being traded at $257.39 with a market capitalization of $17.22 billion. The digital asset just saw a bullish breakout, however, will it be able to maintain this high value going forward in the market?

Litecoin 1-day chart

Source: LTCUSD on TradingView

The Litecoin price was building higher within an ascending channel and witnessed a strong surge as the price broke out of the channel. LTC saw the price surge from $163 to $258 within 16 days and turned the prevalent bearishness into a bullish market.

However, LTC has been closely trading to the resistance at $258 and if it rejects this price level, the value may trade lower.

Reasoning

The surge in the value of the digital asset has resulted in increased volatility in the market. The divergence of Bollinger Bands has been an indicator of the rise in volatility, while, the signal line moved under the candlesticks. The signal line will be acting as a support if the price pushes lower.

Meanwhile, the relative strength index was noting that the digital asset was close to becoming overbought as its value hit 68. The market has been witnessing selling pressure evolve at this stage and if it escalates, the RSI will be pushed towards the equilibrium zone.

While the market switches trends, the momentum has remained high owing to the recent surge. The bullish momentum could help the asset to maintain its high value, but the rise in selling pressure could result in a correction.

Crucial level

Entry-level: $240.99
Take Profit: $191.84
Stop-level: $268.88
Risk to Reward: 1.76

Conclusion

The current Litecoin market has been fairly bullish. However, a rising sell-off could push the price of the digital asset lower under $200. With 50 moving average and the signal line extending support close to $200, the price may not drop beyond this point.


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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://ambcrypto.com/litecoin-price-analysis-11-april

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